COURSE: 

SHORT TIME STUDY ABROAD IN SEE/CEE (604.631, 22S)

TOPIC: 
A COUNTRY STUDY OF ZAMBIA

PREPARED BY:
Tine Eržen
Mirriam Manyando

TABLE OF CONTENTS

List of Tables and Figures

List of Acronyms

1) Economic Indicators
1.1. Indicators of Economic Freedom
1.1.1. Rule of law
1.1.2. Government Size
1.1.3. Regulation effectiveness
1.1.4. Open Markets
2) Main sectors of industry
2.1. Agricultural sector
2.2. Industrial sector
2.3. Manufacturing sector
3) Current challenges
3.1. Economic growth rates, environmental policy
3.3. Infrastructure and socioeconomic development
4) Future developments
4.1. Digitalization
4.2. Alternative energy
5) References
List of Tables and Figures

Figure 1 GDP, billion currency units

Figure 2 Perpetrators of corruption

Figure 3 The construction sector’s contribution to Zambia’s GDP

Figure 4 The service sector’s contribution to Zambia’s GDP

Table 1 Zambia’s economic freedom score

Table 2 Percentage of economic activity by sector

List Of Acronyms

COMESA Common Market for Eastern and Southern Africa

CCPC Competition and Consumer Protection Commission

EU European Union

FDI Foreign Direct Investment

GDP Gross Domestic Product

ILO International Labour Organization

MIGA Multilateral Investment Guarantee Agency

SADC Southern African Development Community

UNZA University of Zambia

ZCC Zambia Competition Commission

ZESCO Zambia Electricity Supply Company, have an actual monopoly

ECONOMIC INDICATORS

The price of copper, which accounts for 75 percent of export revenue and makes Zambia the second-
largest producer of copper in Africa after the Democratic Republic of the Congo, has a significant
impact on the country's economy. In recent years, the country's economy has slowed due to the
decline in copper prices, the effects of the drought on agricultural and hydropower production as
well as the pandemic, which resulted in the first recession the nation has experienced since 1989.
The real GDP declined by 4.9% in 2020 after increasing by 4.0% and 1.9% in 2018 and 2019
respectively. An unprecedented decline in all of the major economic sectors is what led to the
reduction in production. The disruption of supply networks caused a severe decline in manufacturing
output, and measures taken to help prevent the spread of COVID-19 also had a negative impact on
the service and tourism industries. Mining output is recovering despite production disruptions in
South America, which originally decreased when copper demand fell globally. The economy was
facing significant macroeconomic problems even before the pandemic, including rising inflation,
expanding budget deficits, unmanageable levels of debt, limited international reserves, and tight
liquidity circumstances. Price levels and the banking industry have not stabilized despite government
efforts to implement monetary easing in 2019 and 2020. Some of the major contributors to the rise
of inflation include the depreciation of the kwacha's pass-through effects as well as increased food
and transportation costs. Inflation increased to 17.4% in 2020 after the COVID-19 outbreak, and it
stayed over the target range of 6% to 8% in 2021. Following a historic decline of 2.8 percent in 2020,
the Zambian GDP rebounded by 3.3 percent in 2021. High copper prices, better post-election market
confidence, and on-going agricultural recovery are the main drivers of the recovery. However,
poverty rose by 0.2 percent points to 60.3% in 2021 due to the effects of COVID-19. Over the years
2022–25, it is projected that economic growth will be modest, averaging 3.8 percent. However, it
will be necessary to manage the risks associated with prolonged debt negotiations and low COVID-
19 vaccination rates. After ten years of rapid growth, Zambia gained lower middle-income status in
2011, yet widespread and extreme rural poverty—more than half of the population still lives in
poverty—remains a serious issue that is worsened by a high birth rate and a comparatively heavy
HIV/AIDS burden (eight percent of Zambians have the virus.). There have been more than 8 million
people affected by the coronavirus crisis. The government's decision to forgo subsidizing the price of
electricity in order to lessen the burden on businesses during the pandemic had an effect on
employment in the country. According to ILO estimates, Zambia's unemployment rate was 12.8% in
2020, with a particularly high rate of unemployment among young people who most of them were
forced to start their own enterprises to combat it.

Figure 1
INDICATORS OF ECONOMIC FREEDOM

The Economic Freedom Index measures ten aspects of economic freedom which are divided into 4
main categories or pillars, namely: Rule of Law (freedom from corruption and property rights),
Limited Government (fiscal freedom and government spending), Regulatory Efficiency (business,
labour and monetary freedom), and Open Markets (trade freedom, investment freedom and
financial freedom). On a scale of 0 to 100, each of the freedoms contained within these four major
categories receives its own distinct score. The simple average of a country's scores for each of the 10
individual freedoms yields its overall economic freedom rating. In the 2022 Index, Zambia ranked
154th in terms of economic freedom with a score of 48.7. It is one of the 47 countries in Sub-
Saharan Africa, and it is placed 36th overall with a score that is lower than both the average for the
region and the entire world. Zambia's economic development has been fluctuating during the last
five years, picking up a little in 2017 and 2018 before slowing in 2019 and 2020, and then picking up
again in 2021. Unfortunately, the decline in economic freedom over the previous five years has
persisted. Zambia's overall economic freedom has decreased by 7.1 points since 2017 as a result of
lower ratings for trade freedom, business freedom, fiscal health, and property rights. As a result,
Zambia has moved from the "Mostly Unfree" category to the "Repressed" category. Although
monetary freedom shows some potential, many other dimensions of economic freedom are well
below average globally. COVID-19'S IMPACT: 4,016 deaths in Zambia have been linked to the
pandemic as of December 1, 2021, and Zambia's government's response to the crisis was the 83rd
most stringent of the countries in this Index. In 2020, the economy shrank by 3.5 percent.

i. Rule of law
a. property rights

The Land Act of 1995, which distinguishes between the two types of land tenure: leasehold and
customary land tenure, governs property rights. Legally speaking, the state ultimately owns all the
land. In urban areas, property rights are clearly defined. However, property rights are sometimes
poorly defined in rural areas. According to the Heritage Foundation, “property rights and the
sacredness of contracts are well defined in principle but rarely enforced in practice". The foundation
evaluates Zambia's property rights regime as having fallen from a score of 49.6 in 2017 to 45.2 in
2020 (on a scale of 0-100 where high scores imply greater performance). In the meantime, women's
property rights are frequently violated, particularly when it comes to land inheritance. For instance,
a large proportion of Barotseland's agricultural land is still mostly controlled by traditional
authorities. In turn, the difficulty of identifying and upholding private property rights rises as a result
of traditional leaders controlling the land. The Heritage Foundation concludes that the "regulatory
climate does not foster entrepreneurial activity," and after following modest improvements in
business freedom between 2016 and 2018 and a reduction in 2020, they report that this freedom
has decreased since then. Despite this, there is a legislative structure in place to safeguard private
businesses. Zambia is a member of MIGA, a member of the World Bank, which provides security for
foreign investments in the event of war, civil unrest, natural catastrophes, other calamities, or
expropriation.

b. freedom from corruption

Although there is still widespread corruption in the country, it is thought that the situation there is
somewhat better than in other countries in the region. In Zambia's business environment,
unnecessarily long and complicated administrative procedures are typical, which forces many
businesses to operate in the unofficial sector. Findings from the latest Afrobarometer survey, which
was completed well before President Hichilema assumed office, reveal that an increasing percentage
of Zambians believe that corruption levels in the country are rising and that the government is doing
a poor job of combating corruption. The majority of people who interacted with the police reported
having to bribe them in order to get help. The vast majority of citizens surveyed believed that
reporting corruption to the authorities could result in retaliation for the general public. Hakainde
Hichilema, who was elected president in August 2021, has called the amount of corruption
"horrifying" and vowed to have "zero tolerance" for it (BBC, 2021; Africanews, 2021).

Figure 2

ii. Limited government

The Fiscal Freedom Index measures the amount of taxes collected by the government. The top
marginal tax rate on individual income, the top marginal tax rate on corporate income and the total
tax burden as a percentage of GDP make up this quantitative measure. The Heritage Foundation's
Fiscal Freedom score for Zambia represents the total tax burden imposed by the government,
including direct taxes on citizens and businesses as well as the total amount of tax income as a
percentage of GDP. The top rate for corporation taxes is 35%, while the top rate for individual
income taxes is 37.5%. Value-added and property transfer taxes are examples of additional taxes.
Overall, 16.7% of all domestic income is spent on taxes. Over the past three years, government
spending has amounted to 29.8% of total output (GDP), and budget deficits have averaged 10.7% of
GDP. Furthermore, the public debt represents 117.8% of GDP.

iii. Regulation effectiveness

Costs of doing business are raised by unstable electricity and inadequate infrastructure.
Transparency is lacking in a lot of government operations, including contracting. Because the
legislation requires highly significant severance pay for formal workers, the great majority of
Zambians who are employed do so informally or under short-term contracts. Despite higher global
prices, the government increased agriculture subsidies while keeping the price caps on petrol and
electricity constant. Zambia improved slightly from its 2019 position of 87th to 85th in the World
Bank's 2020 Ease of Doing Business Report. The cost of starting a firm, which has increased recently
but is still below average for sub-Saharan Africa on this metric, is rather high: it takes 8.5 days,
requires seven procedures, and costs 34% of GNI per capita. There is a huge sector of the economy
that is informal. The 2017 Q3 Labour Force Survey conducted by the Ministry of Labour and Social
Security revealed that only 23.6% of people who were employed in some capacity were formally
employed. Although this number has not been updated, it is likely to have decreased further due to
the loss of income and employment caused by the COVID-19 epidemic.

iv. Market and Competition

a. Freedom of Trade

Zambia offers freedom of trade, free use of earnings, free conversion of currencies and freedom of
pricing. However, market competition takes place in a weak institutional setting where corruption
and bureaucracy are key factors. Zambia has a comprehensive competition law called the
Competition and Consumer Protection Act 2010 which is a piece of legislation governing competition
in Zambia. Furthermore, the ZCC, a regulatory authority, is responsible for upholding the law. The
Competition and Consumer Protection Commission (CCPC), which has the authority to examine
mergers and monopolies, is situated underneath the ZCC. The Zambian competition authority is one
of the most active in Africa, according to Freedom House. However, the authority's actions continue
to be of a minor scope. The government has occasionally intervened in the economy in ways that
violate rigorous market competition. Official statistics show that in 2020, the CCPC oversaw 93
mergers totalling just $80 million. Some state-owned businesses, like the Zambia Electricity Supply
Company, have an actual monopoly (ZESCO). ZESCO has been commercialized rather than fully
privatized, which means that the state still holds the bulk of the company's shares while the private
sector is in charge of running it. The general public's mistrust of privatization, which is frequently
perceived as a venue for corruption with negligible advantages for consumers, is one obstacle to
more competition. Thus, some monopolies still exist and are probably going to last into the future
although opposition to this practice is growing. Another barrier is the practice of concluding high-
value procurement transactions without a tendering procedure. Theoretically, trade abroad is
liberalized. The Heritage Foundation asserts that, on the other hand, relatively high tariffs and non-
tariff barriers to trade have hindered integration into the global marketplace and lowered the
investment profitability. Zambia has two active preferential trade agreements. The trade-weighted
average tariff rate which is 8.4%, and there are two official nontariff measures in effect. Other
unofficial barriers also limit the ability to trade. The majority of sectors permit foreign investment,
however the investment policy is inefficient and non-transparent. Zambia's average applied tariff
rate was 6.2% in 2018, compared to the simple average of the most favoured nation (MFN) applied
tariff rate of 13.4%. It is believed that overall trade freedom has decreased recently, from a peak of
84.6 in 2014 to 72.6 in 2020. Given that Zambia is a member of the Southern African Development
Community (SADC) and the Common Market for Eastern and Southern Africa(COMESA), two regional
economic organizations, other non-tariff barriers include inefficiency at border crossings and
uncertainty about which tariffs apply and when.
 Table 1

b. Financial freedom

The banking industry dominates the financial sector. All around the country, access to financial
services has been steadily growing. The capital markets and banking system are distinct and, in
theory, aligned to international norms. In southern Africa, Zambia has some of the most liberal
banking laws, and its banks run efficiently. Minimum capital requirements and operational banking
supervision are in place. About 48% of adult Zambians are thought to have access to an account with
a formal banking institution. The stock exchange has listed 24 companies since 2016, and capital
markets are accessible to both domestic and international investors. On the Lusaka Securities
Exchange, share prices did decline, falling from 5,764.02 in January 2019 to 3,983.90 in February
2021 and there was a low turnover. The benchmark interest rate has changed greatly over the past 6
years and the central bank has remained fairly active. High government borrowing rates have
traditionally crowded-out domestic borrowers, which continue to be an obstacle to
entrepreneurship. The ratio of non-performing loans increased from 7.3 percent in 2013 to 12
percent in 2017, but it then declined to 8.9% in 2019. Bank capital-to-assets ratios have stayed
around 11% for a while now.

c. Investment freedom

The function of the Investment freedom index is to evaluate a range of investing limitations such as
restrictions on land ownership, burdensome bureaucracy, foreign exchange controls, expropriation
of investments without fair compensation, security problems, a lack of basic investment
infrastructure, capital control and others. For every one of the constraints present in a nation's
investment policy, points are subtracted from the ideal score of 100. The Heritage Foundation's
Investment Freedom Index for Zambia analyses the barriers to investment activity both domestically
and internationally. More points equal fewer limitations. The GlobalEconomy supplied statistics for
Zambia from 1995 until 2022 for this indicator. Zambia scored an average of 58 points over that time
period, with a maximum of 70 points in 1995 and a minimum of 50 points in 2003. The most recent
value from 2022 is 55 points. The country has committed to putting policy changes into effect to
improve regional trade. It has done well across the board in the regional integration index, coming in
second in COMESA and fourth in the SADC region. Despite being a member of both COMESA and
SADC, exports to the region have not expanded considerably over the past few years due to high
production and transportation expenses. External initiatives to enhance the trading environment
have not made much of an impact. Through the SADC trade related facility project, the European
Union announced plans to invest €800,000 in trade-related interventions in the agricultural and gold
mining sectors. This came after a grant of €420,000 was given to support initiatives relating to
sanitary and phytosanitary standards, trade facilitation and promotion and technical trade barriers.
However, these initiatives haven't had a big influence on cross-border trade yet.

MAIN SECTORS OF INDUSTRY

Copper, the primary export of Zambia, accounts for 60% of all exports and 70% of production in
Africa. Sugar, tobacco, gemstones, cotton and electricity are some other products that the country
exports. 45% of Zambia's total exports go to Switzerland which makes it Zambia's largest export
partner. Other countries include: China (20%), South Africa, Zimbabwe, the United Kingdom, and
Congo-Kinshasa.

a. Agricultural sector

Zambia's economy is based primarily on agriculture, which employs 49.6% of the workforce despite
contributing only 2.9% of the country's GDP (World Bank). Zambia covers 75 million hectares of land
of which 58% have a medium to high potential for agricultural output. Despite this, only 15% of
Zambia's potential arable land is actually being used for farming. The sector contributes a low
amount to GDP because of extreme vulnerability to drought and inadequate rural infrastructure. The
primary agricultural activities of Zambia include the cultivation of crops such as cotton, maize,
tobacco, soybeans, paprika, sorghum, groundnuts, wheat, sunflower seeds and rice. In addition to
crop-farming, Zambia's agricultural sector also focuses on livestock production. The country is also
one of Africa's top exporters of seeds. Despite the on-going pandemic, there was significant increase
in agriculture in 2021, largely due to strong crop yields, which indicates promising futures for both
the nation's economy overall and the rural populace in particular.

b. Industrial sector

It is projected that the industrial sector contributes 10.5% of employment and makes up 40.2% of
GDP, largely as a result of the manufacturing, mining, and construction subsectors. Beverages, food,
construction, emerald mining, fertilizer, horticulture, textiles, chemicals, copper mining and
processing are some of Zambia's major industries. Zambia's building construction industry presents
excellent opportunities for the development of green entrepreneurship for two main reasons. First,
the industry has had annual growth of 17% in recent years and is increasingly serving as a platform
for the formation of SME's (small and medium-sized enterprises). Secondly, the sector is also the
third-largest contributor to the nation's GDP after the tertiary and mining industries and employs
about 200 000 people in total as shown in the figure below.
 Figure 3

The agro-processing of food and beverages, as well as the textile and leather subsectors, are the
main drivers of growth in the manufacturing sector. Zambia is, nevertheless, vulnerable to changes
in the price of commodities around the world due to its dependence on copper. Although the early
stages of the pandemic had a negative impact on the country's industry sector, particularly mining,
high copper prices and the reintroduction of policies allowing mining royalties to be deducted from
corporate income tax have supported investment in the mining sector, which demonstrated a
significant recovery in 2021. Additional tax benefits for export-oriented projects and a decrease in
the corporation tax rate from 35% to 30% in 2022 should help the manufacturing sector grow.

c. Service industry

The Zambian economy's most prominent sector over time has been the services industry. It is a
significant factor in the production and export of products and services and has emerged as a
possible tool for initiatives aimed at reducing and eradicating poverty. High copper prices, economic
liberalization, an increase in FDI inflows, and stronger macroeconomic management have all
contributed to the expansion. As a result, the services sector has grown to play a significant role in
the economy's output, employment, trade, and FDI. The GDP contribution of the economy's main
sectors is shown in the Figure below.

Figure 4
Services now account for 72% of GDP, up from 60% in 2000, while manufacturing, mining, and
agriculture all have stagnant proportions of roughly 18%, 2.5%, and 8.1%, respectively. Therefore,
between 2000 and 2013, services added around 64% of value to the GDP on average. During that
period, the services sector grew steadily at a pace of roughly 6% annually, which was comparable to
the 6.5% real growth rate of the whole economy. If one considers the different underreported
informal operations in the services sector, there is no doubt that this estimate is low. The wholesale
and retail sectors make up a large portion of the tertiary sector. The tourism industry is also
expanding, which benefits the hotel and transportation sectors. Despite that COVID-19 slowed the
country's tourism growth, a minor recovery was seen in the industry in 2021, and this trend is
anticipated to continue in the years to come.

Table 2

CURRENT CHALLENGES

Zambia has an abundance of natural resources, yet there are growing threats to its

i. economic growth rates and environmental policy

Zambia's political and economic governance continued to deteriorate between 2019 and 2021, while
discontent with the existing status quo grew. Prices for products and services have gone up because
the currency's has lost almost 50% of its value against the US dollar. Early in 2021, inflation exceeded
20%. Since 2011, there has been a significant increase in governmental debt, and in late 2020,
Zambia saw its first national debt default since the COVID-19 era. Zambia is also facing threats to its
environment which include the effects of climate shocks, deforestation and wildlife trafficking. The
Patriotic Front government, the previous political party in office, continually emphasized the
importance of environmental stability and made this a commitment in its manifesto. However, none
of these objectives have made much progress. The Environmental Council of Zambia used to be in
charge of addressing environmental issues (ECZ) but it was recently restructured into the Zambia
Environmental and Management Agency (ZEMA). ZEMA is in charge of carrying out environmental
risk assessments for new projects and it seems to have more power than the ECZ. For instance,
ZEMA stopped operations at the copper-processing facility run by Rongxin Investments Ltd. in
October 2020 when a waste dam burst, flooding a store and seriously harming both fish and crops.
However, a lack of political will and corruption has hindered the execution of policies on
environmental preservation and sustainability. Only 0.8% of the budget for 2021 was set out for
environmental protection. In order to prevent the depletion of forests, former president Lungu
requested that the Ministry of Lands, Environment, and Natural Resources exercise stronger
oversight over the timber industry which he claimed was happening at a rate of about 270,000
hectares per year. However, a report on the production and trade of mukula (rosewood) timber
published by the Center for International Forestry Research (CIFOR) in June 2018 revealed that
bribes worth an estimated $1.7 million were paid to government representatives connected to the
president and his family to enable mukula logs to be exported. It calculated that the total amount
lost annually was 100,000 cubic meters which was equivalent to $3.2 million in revenue.

ii. Education system

It might be challenging to find current and accurate statistics on literacy and educational
achievements. The U.N. Education Index, however, indicates that the provision of quality
education is stagnating; in 2019, Zambia's score on a scale of zero to one was 0.557. The amount
spent on education as a percentage of the total budget has decreased recently. The latest value from
2019 is 4.47 percent of GDP and this is partly because of rising tensions between the government,
university students and lecturers who are dissatisfied with their institutions' underfunding and low
salaries. This persisted when it was claimed that UNZA students rioted in March 2020 because
teachers weren't giving classes. At the same time, the presence of subpar teachers—some of whom
are illiterate—remains a significant obstacle. Over 500 instructors were discovered to have
fraudulent credentials in 2017, and the teaching service commission reported the issue was still
present in 2018. To improve the educational system, the country has to make significant additional
investments. The pupil-teacher ratio is the average number of pupils per teacher and it is generally
considered preferable to have fewer pupils. The literacy rate in 2020 was 86.7% and the pupil to
teacher ratio in primary schools was 42 in 2017. It’s crucial to note that the 86.7% literacy rate marks
a minor increase over the 83% recorded in 2010.

iii. Infrastructure and socioeconomic development

There are state officials, administrative institutions, courts with basic jurisdictions and organizations
all around the country that carry out political decisions. However, the lack of adequate physical
infrastructure, which varies widely throughout provinces, continues to be a problem in rural areas.
For instance, traditional leaders frequently make justice decisions rather than judges. Public
administration and the networks of political parties are still very limited. According to the 2018
Zambia Demographics and Health Survey, 58% of the rural population and 92% of the urban
population, respectively, have access to improved water sources. According to the same source, only
6% of people in Western Province and 80% of people in Lusaka have access to improved sanitation.
The nation's dire financial situation, in which financing for services has been cut in order to pay off
the nation's debt, is a major element in the decrease of services. Zambia, which has one of the
youngest median ages in the world, is also going through a significant demographic transition. Its
population, which is largely urban, is projected to be 17.9 million, and it is expanding quickly at a
rate of 2.8% per year, in part due to high fertility, which causes the population to double roughly
every 25 years. As the large young population reaches reproductive age, this tendency is anticipated
to continue, putting even more pressure on the demand for health care, jobs and other social
services. When it comes to primary school attendance, Zambia has reached parity between boys and
females, but this conceals the fact that girls are more likely to drop out before finishing their
education. Although this figure has improved considerably over the last 10 years, it is interesting to
note that while the literacy rate for men is 91%, it is just 83% for women. Women still make up less
than half of the labour force but this is gradually improving and on current trends will attain parity in
the next ten years. Official racial or religious discrimination isn't very common. However, anti-
homosexuality laws are in effect, and according to Amnesty International, homosexuality is
prohibited in Zambia. The former president, Edgar Lungu, had vocally opposed LGBT rights, and in
2018, the police tried to discover gay people who had been "outed" in photos posted on social
media by using their cybercrime unit. In November 2019, the Lusaka High Court sentenced a gay
couple to 15 years in prison with hard labour for "unnatural acts" for the first time in years. The U.S.
ambassador responded strongly, which sparked a public argument between the embassy and the
Zambian government that ended with the U.S. ambassador withdrawing at the request of the
Zambian government. The couple was quietly granted amnesty in May 2020 as a consequence of
diplomatic pressure. Despite its ethnic variety, Zambia has mainly succeeded in balancing the
interests of its different ethnicities. However, it appears that each president favours hiring and
awarding contracts to residents of his home region. This has caused some unhappiness in the other
provinces because they feel, in varying degrees, as though they have been left out of the process of
national development.

FUTURE DEVELOPMENTS

i. Digitalization

Zambia's government and a group of entrepreneurs are actively collaborating to make the southern
African country into a hub for regional start-ups that is modelled after other small countries with
successful tech businesses. According to start-up entrepreneurs participating in the plans, they have
already met with government officials to talk about the business-friendly regulations required to
draw in additional digital businesses, talent and capital. In order to ensure that digital entrepreneurs
are "welcomed, recognized, and supported," Thebe Investment Management is partnering with
several government ministries to build the $1.5 billion mixed-use development called Nkwashi in the
country's capital, Lusaka. It also aims to make Zambia a testing ground for new technologies and is
seeking to overcome common problems including immigration laws and business license
requirements. Infratel, a telecommunications service provider in Lusaka observed how slow SMEs
were adopting digital services or solutions. It became concerned and started an investigation to find
out why MSMEs weren't incorporating digital technology into their operations. One of the reasons
put forth was that SME’s thought that digital transformation was only appropriate for large
corporations with sophisticated IT teams. Secondly, the majority of them feel that adopting new
technologies would cost them a lot of money, but this is untrue because there are solutions that
businesses may use that are very reasonable and subsequently scale up with other services that may
be much more expensive. Thirdly, even though SMEs may be fully convinced of the need to adopt
digital technologies, they are hesitant to do so because there is no clear framework to guide them in
where to begin, and the task can be overwhelming. It should also be noted that the technical jargon
used by service providers can also prevent SMEs from understanding the options available. The ICT
Open Day was created to overcome these obstacles by bringing together digital solution providers,
financiers, and SMEs to network and communicate with the goal of bridging information gaps about
going digital. It is obvious that there is a significant knowledge gap regarding digital transformation
and crucial ICT solutions available in the country. The COVID-19 (coronavirus) pandemic has also
raised awareness of digital technology in Zambia and expanded its use. For instance, from January to
April 2020, the Bank of Zambia saw a 26% rise in mobile payments. As part of the nation's economic
response strategy, the Bank of Zambia has decreased transaction costs to encourage more usage of
digital financial services. Many people did not know how to do purchases online before to the
COVID-19 outbreak, but over time, they have become accustomed to carrying out a variety of
transactions using only their devices.

ii. Alternative energy

The demand for electricity in Zambia has increased but the existing energy supply has had trouble
satisfying this demand. More than 85% of Zambia's electricity comes from hydroelectric sources;
however recurrent droughts prohibit these plants from operating to their full potential. Additionally,
30% of the population nationwide has access to power on average. Even worse, only 5% of those
living in rural areas have access to electricity. By 2030, the Zambian government wants 50% of the
country to have access to electricity. The increase of renewable energy in Zambia is essential for the
social and economic development of the nation as electricity consumption rises. Renewable energy
initiatives are in the works to help Zambia's energy resources develop sustainably. The Capacity
Building for Renewable Energy and Energy Efficiency project is an example of such an initiative,
which is supported by the EU. The EU and the Zambian government are working together on this
initiative to help the country's Rural Electrification Authority (REA) with technical support. The
project aims to provide locally and easily accessible renewable energy sources. For instance, there
are projects involving solar, biomass, and mini hydro power. The project, in particular, aims to create
a network of solar-powered mini-grids to supply electricity to rural areas in Zambia. Small electricity
generators connected to an energy distribution network are known as mini-grids. These are helpful
in Zambia because they eliminate the need for extensive electrical line construction. An estimated
10,000 residents in Zambia's rural communities will have access to electricity thanks to the mini-
grids.
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Zambia GDP - 2022 Data - 2023 Forecast - 1960-2021 Historical - Chart - News. (2022).
Retrieved 22 August 2022, from https://tradingeconomics.com/zambia/gdp